FOREIGN DIRECT INVESTMENT AND CARBON EMISSIONS IN EUROPE: RETHINKING ENVIRONMENTAL SUSTAINABILITY THROUGH RENEWABLE ENERGY AND INTELLECTUAL CAPITAL

This paper examines the relationship between foreign direct investment (FDI) and environmental sustainability in 27 European Union countries and the United Kingdom, focusing on the role of human intellectual capital from 1998 to 2023.The study employed the Panel Autoregressive Distributed Lag (ARDL) approach to achieve its objectives.Results show that FDI inflow has a positive and significant impact carbon emissions, proving that environmental risks are related to uncontrolled foreign capital in carbon-intensive sectors.Interestingly, the adoption of renewable energy significantly contributes to reducing the carbon footprints.Nevertheless, intellectual capital, captured by upper secondary educational achievement, contrary to the "a priori" expectation, shows a positive association with carbon emissions, raising questions about the assumed environmental benefits of education.Shortrun dynamics show no significant immediate effects from these variables.The study recommends rigorous climate-conscious FDI screening, reinforcing green growth policies, enhancing renewable energy adoption, and integrating sustainability literacy into educational curricula to align intellectual development with environmental goals.